Brown: don't rule out tax rises

The chancellor, Gordon Brown, today went on a media charm offensive to put the case for his pre-Budget report and probable future tax rises to fund the NHS.

Mr Brown appeared on GMTV, BBC Breakfast and the Radio 4 Today programme, each time hinting at the need for a rise in direct taxation to bring health spending up to European levels.

He said the Wanless report on the health service, released yesterday, had shown that people's expectations and demands on the NHS were rising all the time.

"Nobody wants tax rises, but there has got to be a debate in this country," he told GMTV. "Do we want the best health service, the pride of the world, something that we can really depend on for the long term-future?

"I want all the parties, I want the whole of the country, to see the figures, to see what the position is and then we make our choice.

The admission marks a sea-change in New Labour's thinking, and a pre-emptive strike on the Conservatives' policy review on health funding, which is expected to plump for French-style private insurance top-ups for all but the poorest in society.

Labour went into both the 1997 and 2001 elections pledging no increase in income taxes, although pointedly refused to rule out increasing national insurance contributions when put under pressure earlier this year.

Delivering his annual pre-Budget report, Mr Brown pledged a "significantly higher share of national income" would in future be devoted to health care in Britain.

With spending plans already set for 2003-04, that could mean Labour going into the next election having already raised some indirect taxes to pay for increased health spending and pledged perhaps to raise income tax levels to reverse "decades" of underfunding.

But Mr Brown added that there was a "big debate to take place on what happens after 2004" and he was not ruling out tax rises.

The shadow chancellor, Michael Howard, said: "Gordon Brown has asked for a blank cheque for the NHS.

"But it is now clear to everybody except Gordon Brown that, without fundamental reform of healthcare, more money will not deliver the results which the people of this country are entitled to expect.

"Gordon Brown has set his face against any fundamental reform of the health service. It is a black day for healthcare in Britain."

The Liberal Democrat Treasury spokesman, Matthew Taylor, described the report as "a complacent statement from an extraordinarily complacent chancellor".

He said: "In the face of British manufacturing collapse, the NHS in crisis and pensioners in poverty, we get tax fiddles and spin on spending figures."

Speaking on BBC Breakfast, Mr Brown called on the Conservatives not to abandon the "national consensus" on the NHS.

"The problem with the Conservative position is that the party stood at the election on what has been a 50-year consensus between the parties that the National Health Service is worth investing in - publicly funded health care is the best way forward for Britain," he said.

"Now they seem to want to move to private insurance, charges, to all these different things, privatising medicine - these are not in my view the way that the public wants us to move."

Asked about the general election promise not to raise basic or top rates of tax during this parliament, Mr Brown pledged the government would keep its promises.

He added that the government would also stand by its pledge not to extend VAT on food and other items mentioned in the manifesto.

Several times during an interview with BBC Radio 4's Today programme, Mr Brown acknowledged that taxes could have to rise to fund investment in the NHS.

Mr Brown said: "We will have to step up the pace of reform and modernisation.

"If the Wanless report is right about productivity, about efficiency, about the use of resources, more will have to be done.

"But if we make these reforms, I think it is also clear from the Wanless report that we need more resources for health care, and we will make our decisions on that, and I am taking it absolutely head-on by saying we don't rule out tax rises."

Mr Brown said there was room for a debate about funding methods, but he suggested that he could see little scope for the kind of private health care insurance schemes practised elsewhere in the world.

He said the Wanless inquiry had examined private health insurance in the US and found it inefficient, costly and prone to excluding millions of people.

Social insurance schemes used in France and Germany, in which the Tories have shown considerable interest recently, involved big top-up charges for visits to hospitals and doctors on top of substantial employee and employer premiums, Mr Brown said.

He added that the Wanless report had concluded that direct state funding for the NHS was probably the best way for Britain.